First Deal in Detroit? What do you think?

9 Replies

Hello Guys,

I was hoping you could help me with my decision.

I am planning to invest for the first time. I am based in California so I have to buy a property out of state. I am mostly in touch with Turnkey providers around Midwest. I almost bought a duplex in Chicago, but it did not work out, because the inspection was not the way I was expecting. I had a goal to invest by the end of this year , but things just did not fall into a place. Now I have 33 K for down payment and no house.

I started to think about Detroit as an investment option. I bumped into this deal in Dearborn Heights for 65K (attached). It is definitely not cashflowing the way I would like to, but I am also counting on the appreciation since the market is still growing, that is why I am considering it.

What do you think about Detroit and about this particular deal in Dearborn? I have heard this city is quite good.

I also have another possible deal in Taylor. The numbers look very similar, cashflow is a bit over $100/month after all the expenses. In general, most numbers on houses from Turnkey providers in Detroit look very similar - I am not super impressed, but in the same time,  I am still feeling that I need to get this city a chance as this is one of the little areas that seems to be getting better and has potential in the future.

What do you think? 

Thanks a lot in advance for your comments.

Tereza

I would pass. Hundred bucks a month isn’t enough cash flow. I️ aim for 150 or more assuming single family house, ideally 200 or more

I'd pass, but that's just me, if you were local and experienced then sure but that's not the case. There are much easier markets out there and being from CA much easier places to research prior. 

Unless you have expert knowledge of Detroit and local contacts in place... pass.

@Tereza Dyerova Welcome! I would pass for a meager $100 and I certainly wouldn't count on appreciation unless you have a local person and data that can support appreciation will happen in that city. Look at Cleveland and @James Wise (Holton Wise). I get their emails and they have some good deals that would fit better for you and much higher cash flow. I have lived in Michigan several times but not an expert on Detroit. Detroit is really street by street. Good luck and keep us posted.

Hi @Tereza Dyerova ,

I will echo everyone else, I would pass. The West part of Metro Detroit (Dearborn included) is a good area to invest. Low cost properties, high rents, and a strong blue collar tenant base.

If you are looking to do turnkey, you should be able to find some properties that are around $60k and rent for $850-900. It appears to be me that you are on the high price side of that and low side of rent, not ideal.

If you have boots on the ground, you can get those same properties for $40-50k. Hope this helps.

I agree with the previous posts. You can find a similar property in a similar area cheaper and with higher rents. 

Let me know if you need help finding something that is better. I am very familiar with Metro Detroit

So, a couple of questions:

1. Do you have really good property management lined up for this house?

2.  What kind of renovation did this house get?  If it was totally renovated, there might be an argument to keep considering this property.

I would look into Warren, MI.  Because its Macomb County the taxes are lower, and the rents slightly higher.  Also, I bet you could get something thats all brick.

I have a buddy dumping his 3b/1ba he fully renovated (windows and roof too) 2 years ago because of a family emergency for 75K he pulls in $1000/mo. Tenant base will be a little tougher, but South Warren and Dearborn Heights are fairly close quality wise. Not saying to buy it but just trying to show the numers available.

Also, I think if you search harder in Taylor there may be a better deal.  I feel as if the money your spending on TK to provide their value-add could be saved if you just flew here and looked at 20 places over 3-4 days.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here